Oslo-based NorthCape Capital-backed New Shore Invest is launching a new financing platform for building ships that offer equity-based limited partnership shares to retail investors via Security Token Offerings (STOs).
The German KG model for funding new ships once drove a new wave of boat construction, has largely evaporated since the 2008 global financial crisis. What was once a billion-euro market and an important source of equity for ship owners vanished.
According to Maritime Law Firm Kravets & Kravets, the old model is dead:
“Whereas prior to the shipping crisis (ca. 2007), 26 percent of the global order book tonnage came from German one ship KGs, post-crisis, that number has shrunk to a piddly 2 percent. In other words, the German one ship KG market has been utterly, almost completely annihilated – since 2008, over 180 one ship KGs have gone insolvent and been removed from the market.”
New Shore Invest aims to revive and digitalize that market.
“There is a market among investors as well as appetite from ship owners for fresh equity”, says Hanno Tamminga, one of the founders of New Shore Invest told Hellenic Shipping News.
“A first project is in the pipeline already and will be launched in Germany in Q1 2020. The focus is the beginning of “4.0 shipping projects”, for example, green new buildings, LNG propulsion etc. “A green and innovative story is what we need in order to attract retail investors to shipping again”, Hannes Hollaender, third founding partner of New Shore, added.
“The advantage of online marketing is, that we can reach out to hundreds of thousands of potential investors.”
New Shore Invest hopes to offer retail investors a good alternative to real estate or stock markets and to fill a painful gap of equity for the shipowners.
From the New Shore Invest website:
“The current ship market is in the phase of retiring older ships and improving fleet utilization. In the general cargo segment, in particular, little investment has been made in new buildings in recent years. Accordingly, the segment is also characterized by numerous retirement, also in the course of the new environmental regulations.”
“This makes the segment particularly interesting for investors. The falling number of transport ships favours the better fleet utilization of the existing ships, which comply with the latest environmental regulations. In addition, new shipbuildings are required in this segment in order to efficiently counter the forecast increasing maritime trade.
The current market situation is therefore particularly favourable for investors since with an investment via New Shore Invest they can benefit from the likely increase in charter rates and possible increases in the value of the ships.”
Importance of merchant shipping – 90% of world trade takes place by sea
- digital drawing process (with digital tokens)
- Low minimum deposit (from € 1,000) so that private investors can access it
- free brokerage for investors (efficient online sales)
- detailed information available online for complete transparency
- By tokenization laid the foundation for a future liquid secondary market
How it works
Investment – With the help of your investment, a shipping company receives the necessary equity to implement a new ship project. Your invested money flows 100% into the respective project company.
Loan – In addition, the shipowner receives outside capital from bank financing. Thanks to the equity of the investors and the loan from the bank, depending on the project, a new ship will be built or an existing ship with good prospects will be purchased.
Charter Revenues – If the ship is built or bought, the shipowner rents (“chartered”) the ship as part of a charter contract on the global cargo market and thus generates revenue.
Costs – Operating, financing and maintenance costs are paid from the charter income during ship operation.
Repayment and Interest – The shipowner pays the bank interest and repayments from the ship's turnover.
Dividends – In the course of the ship's generated profits, investors receive ongoing dividends. Investors in New Shore Invest become co-owners of ships and also benefit in the case of a sale of vessels.
Also published on Medium.